Exhibit 14.2

-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is the optimal quantity of information?

Question

Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is the optimal quantity of information?

Quizplus · Accepted Answer

The optimal quantity of information is where the marginal benefit of information equals the marginal cost of information. In this case, that quantity is represented by the point labeled I* on the graph. It is not greater than or less than I*. Therefore, the answer is C.

Exhibit 14.2 -Refer to Exhibit 14.2,which Shows the Marginal Cost and the Marginal